What Do All These Mortgage Terms Mean?
The range of home loans and the variety of lenders today can really get confusing. Different terms are constantly being tossed about in advertising, via the media and on the internet. People need an explanation of what each term means and how it affects them.
Reverse mortgage is another common lending term these days, but many people don’t really know what this means or why they should think about getting one.
So What Is A Reverse Mortgage Exactly?
A reverse mortgage is also known as a home equity conversion mortgage (HECM) in the USA. This financial product is specifically tailored to homeowners who are 62 years of age and older. The homeowners must have acquired equity in their home with a desire to use this equity to supplement their retirement income.
A conventional mortgage is known as a “forward mortgage”. Reverse mortgages differ in that there are no mortgage repayments to make. Instead, the lender makes payments to the borrower. Homeowners are still responsible for insurance and taxes with reverse mortgages, and they must use the home as their primary place of residence.
This type of home finance was introduced to help those in their retirement years have a method of obtaining cash to help out with basic day to day living expenses when trying to survive on a limited income.
Requirements For A Reverse Mortgage
Of course there are always requirements to be eligible for any kind of finance, and reverse mortgages are no different. For starters, borrowers must be 62 years of age or older and be able to fulfill the following criteria:
- Be a homeowner and the home is their primary place of residence
- The home must be in good condition in order to be able to obtain reverse mortgage finance
- The home must be owned outright free and clear, or only have one small repayment remaining
- The house must be single family (or multi family up to 4 people), or be an approved manufactured home or condominium
- All borrowers will undergo a financial assessment Save & Exit
- Borrowers must complete counselling with an approved HUD counselor
People over 62 who feel a reverse mortgage might be right for them should get in touch with Reverse Mortgage Site today, to discuss their needs and eligibility for this kind of finance.